Were You the Victim of 401(k) Fraud?

Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.

Millions of Americans are relying on retirement and pension plans to ensure they are provided for in their golden years, but mismanagement, high fees, poor investment options, and administrative costs can drain retirement accounts without their knowledge.

401(k) fraud and other retirement plan fraud refers to mismanagement by plan administrators who should be working in the best interest of plan participants. In fact, employees who contribute to a 401(k) and other retirement plans are entitled to certain benefits and protections under the Employment Retirement Income Security Act (ERISA). Under ERISA, plan administrators are obligated to manage covered retirement plans for the benefit of plan participants.

Unfortunately, plan administrators do not always work in the best interest of the employees paying into ERISA covered retirement plans and other plan beneficiaries. 401(k) plans are especially susceptible to fraud and mismanagement because most people do not have a choice – the must use the plan provided by their employer.

401(k) fraud and other ERISA violations include:

• Excessive administrative fees
• Poor and/or expensive investment options
• High or redundant record keeping fees
• Embezzlement
• Providing misleading information

401(k) fraud is difficult to spot because beneficiaries do not always keep up with the performance of their accounts and often chalk up excessive fees to a poorly performing investment.

Americans pay as much as $60 million in fees for 401(k) management each year, however, and administrators have increasingly come under fire for gross mismanagement of ERISA protected plans.

In recent years, plan participants alleging 401(k) fraud have been increasingly successful in court and received money back from plan administrators.

If you believe you have been the victim of 401(k) fraud, you may be entitled to compensation. Get help today from the experienced attorneys at Bradley Grombacher.

How 401(k) Fraud Happens

As the vast majority of companies moved away from defined benefit plans, otherwise known as pensions, 401(k)s were introduced to help employees save for retirement. Employees do not often get a choice of retirement plans. Further, employers who contract for the plans often get a share of the profits or kickbacks.

Mismanagement is all the more possible with employer-sponsored 401(k) plans because employees are not dealing directly with an investment advisor. This makes things like risky investment options and 401(k) fraud easier to hide from plan participants.

How to Deal with 401(k) Fraud

If you have discovered excessive fees or a risky mutual fund in your 401(k) and are concerned about 401(k) fraud, there are several options. First, understand that ERISA entitles your covered retirement plan to certain protections.

Also, understand that the investment company your employer contracted with to provide your 401(k) plan and manage millions and even billions of dollars are also regulated by ERISA to work in your best interest.

Plan advisors have a fiduciary duty under the law and, if they break it, you are entitled to partial or even full compensation for your losses.

If you have been the victim of 401(k) fraud, it is also likely that your coworkers and even employees of other companies and organizations who have the same plan are also victims of 401(k) fraud. Taking action against investment brokers can help protect others who have worked hard to provide for their retirement under these plans.

The first step is to report your concerns about 401(k) fraud internally to your human resources department, plan administrators, and supervisors. While ERISA protects plan beneficiaries, it also provides an administrative procedure to address concerns about 401(k) fraud.

If your concerns include potential criminal activity, like theft or embezzlement, you should also contact local law enforcement.

The Employee Benefits Security Administration (ESBA) also manages reports of 401(k) fraud and can launch an investigation into violations of ERISA.

It can be daunting to make a report of 401(k) fraud. However, you should be aware that whistleblower protections can protect you from retaliatory actions. An experienced 401(k) fraud attorney can also help guide you through the complex administrative and legal processes and ensure you and others victimized by 401(k) fraud get the compensation you deserve.

If you believe you have been the victim of 401(k) fraud, you may be entitled to compensation. Get help today from the experienced attorneys at Bradley Grombacher.